Image: Jeramey Jannene via Flickr
The negative effect the recession has had on the real estate market in Canada is unmistakeable. However, good news is on the horizon. Condo buyers that bought at the height of the market in 2007 are finally starting to move into their completed condos. The result is that in 2010 and 2011, there will be a flurry of move-ins.
George Carras, president of RealNet Canada Inc, predicts that in the GTA alone, 47,000 condo units will be finished in 2010 and become ready for their owners to move in. In 2011, he thinks there will be 27,000 condo units available. Ben Myers, executive vice-president of Urbanation Inc., has come up with slightly different figures. In the Metro Census Area (a smaller region than the GTA), he predicts 17,000 condos will be completed in 2010. In 2011, there will be 19,000.
Despite their disagreement on the exact numbers, the trend is clear: 2010 and 2011 will be big moving years for the Toronto area. The same will be true for the other urban markets that experienced condo booms in 2007, including Vancouver, Calgary and Montreal.
The most important effect of this surge in completed condos will be the way it will ease the current condo shortage. The rise in sales in late 2009 has helped the market reduce the inventory stockpile that developed after the credit crisis hit. As a result, condo vacancy rates are dropping: according to Myers, the current vacancy rate for existing condos in Toronto’s downtown is 1%. A new stream of completed condos would help ease this shortage, making existing condos more affordable for buyers.
As well, the new populations in these urban areas will make them more attractive to buyers. For example, the rising populations will drive development of retail and jobs. Barry Lyon, president of N. Barry Lyon Consulting Ltd. thinks that “[2010] will also be a boom time for moving companies, furniture stores, hardware stores – even dog-walking services. People moving into new homes need all these things, and when they are concentrated into specific neighbourhoods you can be certain business in those neighbourhoods will boom.”
But carpe diem: potential condo buyers should act relatively quickly to take advantage of the surge. Since the recession hindered the ability of developers to launch new condo projects in 2008 and 2009, a tightening of the market will likely occur after the surge has subsided in late 2011.
Nelson Goulart
Broker of Record with Signature Service GMAC Real Estate
www.ssgmac.ca
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